Over at my startup, Pleezpay.com, we’re currently working through a minor “pivot” for our business. A pivot for a startup is where you shift from the premise of your original business in order to chase a specific opportunity (that’s us), or because customer feedback has told you your original premise isn’t working. It’s common with startups striving to target or chase opportunity because they typically have less capital invested in their current direction, and less of a customer base to disrupt, so are able to make large changes with relative ease.
In our case we’re able to keep our original business focus, but we’re adding a further module that is separate, yet compatible. It’s exciting because it adds further vertical niches to our potential market, and it’s challenging because its asking us to think differently about what our business looks like in the future.
This made me consider if it was possible to pivot a large established business. In the business lifecycle a natural point will be reached over time where market saturation requires business leaders to think very differently about where the future of their business lies. A great example seems to be happening in the Australian mobile telephony market right at the moment where Optus and others have highlighted that outright smartphone growth is slowing as the market becomes saturated.
This is typically a time to look at acquisitions that will enable a revenue step change that continues growth, be they in your existing market or in parallel. It’s also often when businesses scramble to invest in innovation to gain that next significant growth lift, or just keep up with changing consumer tastes. However, meaningful change is an incredibly hard thing to do when you carry the legacy of an existing business with you. Even more so if it’s a listed business focused on delivering growth for the shareholders, because inherent in that relationship is distaste for the risk that new ventures typically carry.
Is there a way around this blockage for large businesses, a way to “pivot” that enables you to keep your existing business moving and yet take off in a new direction at the same time? One example I know of is a large business in ATM financial services that needed fresh growth, having hit market saturation for its niche. They went ahead and established a completely separate prepaid payments business, backed by the original company, in order to chase a new opportunity targeted at delivering high growth to the overall entity. It was a brave decision that they hope doesn’t just add a new string to their bow, but which will allow them to use an entirely different bow in the future.
It’s a choice that not many business managers are brave enough to consider, preferring to “squeeze the lemon”, or bolt on similar business acquisition. However, every business has a lifecycle and every market has its time in the sun. If you’d asked Rupert Murdoch whether he needed to change his newspaper business model 10 years ago he’d have laughed at you, but now he has to innovate like hell in digital just to keep newspapers near profitability.
All businesses should look at themselves with a critical eye when growth starts to slow and consider whether they’re brave enough to pivot.
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